Winning the Lottery


What would you do if you won the lottery? As many of my readers know, I’m not too fond of the lottery idea. Some call it gambling, Warren Buffett and others refer to it as a “tax on the poor”.

There are two problems you face winning the lottery:

How you win. We know the odds are tremendously out of your favor. If you are going to buy a ticket know that you are practically throwing that money away. Do it for fun – like whenever the winning are above $100 million.

I once got an idea of what type of odds we’re playing with here. I was shown a closed cylinder that rolls on a spool. It contained over 1 million tiny beads of different colors. 9/10 were red, 1/10 were white, 1/100 yellow, 1/1000 green, 1/10,000 blue, 1/100,000 purple and 1 in all million was black. I stood there spinning this thing for over 20 minutes. Needless to say my only surprise was finding a few blues.

The odds of winning a lottery are about 27x that and you must pay $1 for every bead you pick up! Not to mention that you have to split the jackpot with anyone else who luckily happened to pick the same lucky numbers you did. Oh and don’t forget taxes (28%) and the payout-ratio (lump-sum or annual payments).

That you win. The second problem with lotteries in inherent. People who understand money don’t buy tickets, and those who buy tickets don’t understand money.

The first thing most people do when they win is spend. They buy a new house, car, boat, whatever with, and here’s the kicker: no-money-down easy-low-monthly payments. (Gets the suckers every time). Before you know it the once grand plan of a work-free and beach-resort-retirement crumbles in a pile of doodads and interest payments.

Ok so what if you do win?
I thought about it before, mostly for fun. Here are my thoughts:

  • Wait! You usually have a few months to claim your prize. This way you avoid all the hoopla and media attention, especially if it’s a big win. Most winners take anywhere from four days to two weeks before turning in their winning ticket. You just better be the type who knows how to keep a good secret! When you do withdraw…
  • Take the Lump Sum. You usually have two options: Get the amount over 30 years or in one payment for a lower settlement. You’ll then have the opportunity to invest the proceeds to earn more than you could with the guaranteed return from the annuity payments. Before handing in your ticket, consult a good accountant to assess your best options tax-wise.
  • Arrange for a special account at the bank. You can’t just deposit millions into your plain ol’ checking account. And they don’t really give you a paper check with a lot of zeroes (that’s just for the picture). They give you the money by a wire transfer to your pre-arranged special account. Don’t invest it. Not yet. $10,000 is not like $10,000,000. The same strategies apply but the tactics are drastically different. What was once buying a few shares in a penny stock is now a full-on buyout.
  • Create a middle man. Many people suggest you change your phone number as everyone’s going to want to reach out and touch you. I simply suggest you hand your phone over to an assistant and let them screen your calls. But don’t worry to much about that because you’re ready to…
  • Go on vacation! That’s right. What the first thing people do when they win big? They spend… relative to their current lifestyle and incomes hoping that the money will suddenly make their life better. A vacation alters two things: A) It removes you from your familiar surroundings thus distracting you from your relative interests. B) It provides you with the leisure and time to…
  • Ponder your life. Ok, so you’re staying in a 5-star resort on a Beach in Monte Carlo sipping your favorite tropical ornament and hanging with the high rollers. Do you feel any more fulfilling? Is your life any happier? What do you really want? Do you like your job for reasons other than money? This is your time to plan your new life and enjoy some of it while you’re still young.
  • Find a your new best friends. An accountant, financial adviser and lawyer.And they shouldn’t all be the same person. Just because you have your millions doesn’t mean you can do away with sound financial planning. Ask around. Referral is the best way. Ask people who they have used and been happy with.
  • Read voraciously. Welcome to the New Rich. But along with great opportunity comes responsibility. Even with your qualified team of professionals, you should have your own knowledge of what and how money works. Every great entrepreneur does the same things. The lottery will just get you there faster!


Just for fun, here’s one way to better your chances of winning:
Play less often but play the same number of tickets overall. 5 lines played monthly in one draw have a better chance than 1 line played weekly for 5 weeks.

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One Response to “Winning the Lottery”

  1. Gershon Garber Says:

    It's unfortunate really, as I look at it from afar. I may have bought 20 lottery tickets in my 40+ year life. Not that there is any shame in trying, but as you note, it should be considered entertainment. What disturbs me, is seeing they lady at 7-11, with a pre-toddler in the back of her car wearing nothing but a diaper, scratching off the tickets as soon as she gets back into the car, and going back in if she wins nothing, or perhaps $5-10.

    If I gambled, I think it would be worth driving to Tampa, and betting on black jack – where I come close to 50-50, and that's only if I've spent considerable hours studying charts, knowing when to hit, stay, double, or split. As simple as the game is – there is complexity, and a bit of knowledge – and the house STILL HAS THE EDGE (by about 1%, if one plays perfectly.)

    In gaming – at least real gaming (to win, at say black jack or roulette), if you do everything right, it becomes nothing different that working at a job. Why not just get a miminum wage job, and be guaranteed an income?

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